Company insolvency often occurs due to stagnant cash flow – and that can be for a combination of reasons including overdue invoices, bankrupt customers, and even just a proliferation of cheques that have not yet cleared.
In the future though, that last point at least should be less of a problem, as HM Treasury are planning to make it faster and easier to cash cheques – even faster, in fact, than it is to complete a BACS transfer.
The key to this is removing paper from the process of cashing a cheque, and instead allowing digital images of cheques to be treated as valid representations of the cheque itself.
By doing so, the image can be transmitted between banks and clearing centres much faster than transporting a physical paper copy, accelerating the clearing process.
Angela Thomas, managing director of the Cheque and Credit Clearing Company, said: “Our goal will be to ensure that as many customers as possible can benefit as quickly as possible whilst ensuring we maintain the integrity and security of the cheque clearing for everyone.”
For businesses, this could be welcome news – faster and easier processing of cheques could ultimately mean no need to run to the bank at all, while more liquid cash flow is always beneficial in combating company insolvency.